Kospi leads Asian-Pacific advance

US stock index futures were modestly higher across the board in early trade this morning. This followed a positive session on Monday, which saw all the majors erase early losses to end with impressive gains.

These were led by the NASDAQ and Russell 2000, which added 1.2% and 1.5%, respectively. The S&P 500 also fared well, gaining 1.0%, while the Dow lagged a touch, ending 0.6% higher. It was dragged down by a 1.9% drop in major constituent Goldman Sachs following the release of its first quarter results.

The investment banking giant easily beat expectations on overall profit and investment banking fees. But traders rushed to book profits following a strong fortnight for the share price after fixed-income trading revenue fell 10% year-on-year. Today sees earnings updates from JP Morgan, Wells Fargo, Citigroup and Johnson & Johnson.

The fragile ceasefire between the US/Israeli coalition and Iran is just about holding up, even as both sides accuse the other of breaching its terms. This also follows the breakdown in negotiations between the US and Iran over the weekend.

Tehran continues to control and block the Strait of Hormuz, while the Trump administration has responded by blocking access to Iranian ports in the region. That means even fewer commodities available to the rest of the world, in particular China and other Asian-Pacific countries.

In that regard, a China-adjacent tanker, ‘Rich Starry’, is heading toward the Strait and could be the first major test of the US blockade. Meanwhile, leading policymakers from Israel and Lebanon will meet in Washington today to discuss a peace deal.

The S&P 500, NASDAQ, Russell 2000, and Dow are all well above levels seen just ahead of the outbreak of the war, which began at the end of February. In addition, all are within easy reach of their all-time highs, with the S&P currently just 1.7% below its record intra-day high from January. Investors believe that the war will end soon, although whether that means in a couple of days, weeks, or months isn’t yet clear.

Source: TN Trader

What is clear is that the markets don’t believe it will take years, and the steep backwardation in crude oil prices supports this view. As mentioned above, nobody wants to be under-exposed to risk assets, let alone be short, should the war suddenly conclude, or even if the Strait of Hormuz were unblocked.

While it would still take years to repair the damage to the Gulf States caused by the war and rebuild oil reserves, news of an end to hostilities is widely considered likely to trigger a strong rally across risk assets. That may be the case. But it could prove to be a knee-jerk reaction which reverses just as quickly as it arrived.

European stock indices were all firmer in early trade on Tuesday, supported by gains across US stock index futures. Over the past three weeks, all the major European indices have recouped a significant percentage of the losses made since the outbreak of the US/Israeli war against Iran at the end of February.

But unlike the US majors, all are still trading well below their pre-war levels. Perhaps the major reason for this is that European equities had outperformed their US counterparts in 2026. They were at, or near, their respective all-time highs just before hostilities began.

Source: TN Trader

In contrast, US equities had been lagging, particularly the tech sector, as investors began to question the AI trade, particularly when return on investment was considered. Bear in mind, once this war is over, this is a question that investors will have to reconsider.

They will also be challenged over issues within private equity, and just how ring-fenced these issues may be from the wider market. Then there’s the issue of inflation, and the difficulties that central banks have in trying to ease monetary policy when inflation remains far above central bank targets.

While inflation has been pushed higher by a jump in energy prices due to the war, it was already on the rise before hostilities broke out. So, will investors face up to these difficulties and take profits, or grimly hang in there climbing the wall of worry, or just smile broadly and add to their exposure in blissful ignorance? We’ll see soon enough.

The US dollar was weaker across the board this morning. Investors ditched it as a ‘safe haven’ as expectations grew of a quick end to the war between the US and Iran. This new-found optimism comes despite the breakdown of peace negotiations between the US and Iran over the weekend, and as the Strait of Hormuz remains blocked to most shipping.

Source: TN Trader

The ceasefire announced this time last week is now halfway through and still barely holding. Both sides have accused the other of breaking its terms. Iran has said that Israel must stop its attacks on Lebanon, while the US has said that Tehran must open the Strait of Hormuz. To that end, the US is now blockading Iranian ports across the region.

However, US Vice President JD Vance described negotiations in Pakistan as “productive,” and that momentum had been established, which could lead to a second round of talks. These are expected to take place before the ceasefire expires on 21st April.

Reports have also indicated that Iran is considering halting uranium enrichment for five years, although the US has pushed for a 20-year suspension.

The cash Dollar Index has repeatedly failed to break above key resistance at 100.00. It is currently testing an area of mild support around the 97.70 region. A prolonged break below here raises the possibility of further dollar weakness, with the potential for the cash Dollar Index to retest the January low of 95.25. Traders have priced out the possibility of a Federal Reserve rate hike following declines in oil prices linked to ceasefire optimism.

Markets are now focused on the March Producer Price Index release later today. Investors are also watching the Israel-Lebanon meeting scheduled in Washington at 15:00 BST.

Gold gapped down on Sunday night following news that the US/Iranian peace talks broke down over the weekend. The precious metal lost around $150 per ounce but found some support around $4,650. It has recovered quite well since the early hours of yesterday and came close to $4,800 in early trade this morning.

Source: TN Trader

Gold’s fortunes are once again closely entwined with those of the US dollar. Gold is not behaving as a ‘safe haven’ asset. In fact, it is clearly now trading as a risk asset, which rises or falls in an inverse correlation with the dollar, which has itself been the major beneficiary of any ‘flight to quality’. This relationship may be holding for now, but it can fall apart very easily.

But investors seem convinced that the war is coming to an end, suggesting that oil prices should fall back soon. This has seen the likelihood of a Federal Reserve rate hike get priced out of markets, while the possibility of a rate cut before year-end has risen. This is weighing on sentiment towards the dollar and supporting gold for now.

Silver also extended gains made yesterday. Having gapped down to the mid-$72 region early yesterday, it is now pushing up towards resistance at $78.00 as bullish momentum has continued to build after the Asian-Pacific session.

Source: TN Trader

Oil prices were a touch softer on Tuesday, with both front-month WTI and Brent trading nearer the bottom end of their recent respective ranges than the top. Both front-month contracts were trading below $100 per barrel, and the forward curves indicate that supply issues are tightest over the short term and expected to ease up significantly throughout the rest of the year.

Source: TN Trader

In other words, oil traders expect the war between the US/Israeli coalition and Iran to be over soon. US Vice President JD Vance said further progress now depends on Tehran after the weekend talks failed to produce a breakthrough. He claimed the US had already put significant proposals on the table and that an agreement could benefit both sides if conditions around Iran’s nuclear programme are met.

Meanwhile, the US blockade of Iranian ports around the Persian Gulf and Strait of Hormuz came into effect yesterday. Restrictions apply specifically to ships entering or leaving Iranian ports and coastal zones.

After a weak bout of Sunday trading, which saw Bitcoin drop back below $70,500, it surged higher yesterday afternoon, closing in on $74,500. It has managed to hold those gains this morning, and bulls will be trying to drive prices beyond the highs hit in mid-March around $76,000. If this is achieved, then the next obvious upside target is $80,000, a level last seen at the end of January.

Yesterday’s rally looks as if it was driven by a spate of short covering after sellers were unable to push prices back down below $70,000. It will be interesting to see if fresh short selling now emerges, which would cap any immediate upside and keep Bitcoin rangebound.

Both Brent and WTI crude oil are back below $100 per barrel. But crude looks likely to retain a firm bid given the flow through the Strait of Hormuz is unlikely to normalise quickly. Gas markets also remain worth monitoring, while crypto continues to show resilience, which may embolden cautious investors to take on some modest risk in the sector.

Vice President JD Vance said no deal has been reached yet with Iran, but confirmed that a framework for a broader agreement exists. Further negotiations now depend on Tehran. Markets appear increasingly confident that a deal will be reached, although the blockade of the Strait of Hormuz has begun and European alignment remains mixed, with the UK not seen supporting the move while France remains in talks.

Attention now turns to the March Producer Price Index release alongside IMF meetings and a heavy schedule of Federal Reserve speakers. Earnings from JPMorgan, Johnson & Johnson, Wells Fargo and BMW will also shape near-term sentiment as investors assess whether corporate performance continues to support the recovery in risk appetite.